6,000 jobs to go at Siemens-Gamesa as power division faces similar cuts

Siemens Gamesa plans to cut as many as 6,000 jobs worldwide with sales expected to dip by around a fifth in 2018. Meanwhile Siemens is trying to curtail the need for a similar cut to its overall power division. If the cut is carried through, it would amount to more than 20 per cent of the wind power company’s total workforce of around 26,000. Wind turbine makers have been facing growing competition, putting pressure on pricing and inventory values and raising expectations for more takeovers to build scale.

Sales are projected to fall to between EUR9 and 9.6bn this year from about EUR11bn in fiscal 2017, a 5-per cent gain from year-earlier levels. “Our financial performance is still not at the level we’re all aiming for,” chief executive Markus Tacke said.

Siemens merged its wind division with rival Gamesa this year following deals that saw Germany’s Nordex buy the turbine unit of Spain’s Acciona and General Electric take over Alstom Energy of France. The overall Siemens operation is set for an overhaul in the coming year but the Munich-based group wants to limit job losses at its power generation unit.

The Munich-based group is expected to cut thousands of jobs as demand has collapsed and is unlikely to return for large turbines that have been replaced by renewable energy in Germany and beyond. The Siemens power unit reported a 41 per cent drop in orders and a worse-than-expected 23 per cent fall in profits in its fiscal third quarter that ended in June. An unnamed manager told Reuters, Siemens could consider keeping plants open in eastern cities and towns such as Erfurt and Goerlitz in exchange for some job cuts in larger centres such as Berlin and Muehlheim in the Ruhr valley where workers have more choices. “Maybe you have to give up a percentage point of margin to give people some perspective,” he said, adding that management and labour representatives would likely start negotiations in earnest in the second half of November. Global demand for large gas turbines has roughly halved since 2017, Siemens estimates, while production capacity is more than three times what the market needs. The Siemens power unit reported a 41 percent drop in orders and a worse-than-expected 23 percent fall in profits in its fiscal third quarter that ended in June. The power division has 30,000 employees worldwide, of which about 12,000 are based in Germany. Chief Executive Joe Kaeser has asserted that the government’s abrupt decision to switch to renewable energy caused a structural change in the industry that made the large-turbine business unsustainable in Germany.